After a discussion I had with new client on Friday afternoon, it seems there is still a huge amount of confusion about what and how much an employee/business owner can be re-imbursed for using their private vehicle for work. It is true that if you use your private vehicle in your business, you can claim 40p/mile for the first 10,000 miles in a tax year and then 25p/mile over that level completely tax and NI free. This is fairly straight forward and hasn’t changed for a while. Just remember to keep mileage records in your diary or similar to back up your claim.
The confusion comes when other types of vehicles are used. [private_basic]
Yes, the rules apply if you use your own van for business purposes.
No, there are no other rates depending on what type of car you drive. It is the same for a brand new Bentley as a 20 year old Fiesta.
Did you know you can claim for business use of your private motorbike? even for your bicycle?
Yes you can. The motorbike rate is 24p/mile. The bicycle rate is 20p/mile. And… no annual limits apply to those rates.
There are a few pitfalls to beware of when using these rates…
- Do NOT get greedy and claim more per mile than the approved rates or you will be subjected to Tax & NI when discovered, along with a few penalties along the way.
- Do keep good records of your mileage so that your claim will stand up to scrutiny in years to come.
- Do NOT claim any mileage from your home to normal place of work – this is private and you will be subject to Tax & NI if found out, along with penalties.
As long as you keep to the few simple rules, this is a good way of removing tax and NI free income from your business and you should always check to see if you should be buying your own car and charging the business for it’s use, or having a fully funded company car.
If your accountant doesn’t discuss this with you, bring it up at your next meeting. It could save you quite a bit of money.
If you would like some more information on this, or any other matter, please do not hesitate to get in touch. All the details are on the contact page.